Alaska to Issue Pension Obligation Bonds

April 7, 2008 ( - Alaska lawmakers have approved a plan to issue pension obligation bonds to help the state cut down its current $8 billion to $10 billion pension funding shortfall.

According to an Associated Press news report, the state Senate last week approved a House measure authorizing the bond issuance with the proceeds to go to funding the Public Employee Retirement System and Teacher Retirement System. The commissioners of the Departments of Revenue, Administration and the Commerce, Community and Economic Development will make the decision about whether to issue the bonds.

“Pension obligations bonds are a simple and proven way of lowering the amount the state will have to spend to pay off the unfunded liability,” said Senator Bert Stedman, in the news report. The proceeds from the bonds will be invested by the Alaska Retirement Management Board.

A number of states and local governments have issued such bonds, most recently California counties, Oregon, Kansas, Wisconsin, and Illinois, which holds the record for size at $10 billion.